Supreme Court Reiterates: ATS and GPA are not Title Documents

In its recent judgment titled Shakil Ahmed vs Syad Akhlaq Hussain [2023 INSC 2016] the division bench of the Supreme Court of India comprising of Hon’ble Mr Justice Vikram Nath and Hon’ble Mr Justice Rajesh Bindal, has once again thrown a significant light on the legal intricacies surrounding the transfer of immovable property particularly concerning the legalities involved in passing of title of immovable properties in property transactions. The Supreme Court once again held that the transfer of title with regard to immovable properties cannot be effectuated through an unregistered Agreement to Sell or General Power of Attorney.

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It is well known that the legalities surrounding property transactions are not only complex and nuanced with various mechanisms and instruments employed to facilitate the transfer of ownership but also the property transactions become quite ambiguous and vague due to different methods adopted in such transactions for transfer of title resulting in disputes and litigations on various accounts. However, the Supreme Court's recent ruling has sharply focused on the limitations imposed on two widely used instruments namely the Agreement to Sell and the General Power of Attorney which are very much prevalent. People tend to not register the transfer related documents on various excuses including but not limited to save/evade stamp duty, to hide such transactions from taxing authorities etc.

Supreme Court has held that In the absence of registration, an Agreement to sell stands as an un-enforceable document, incapable of transferring title. The court's reasoning revolves around the notion that a mere agreement, without the imprimatur of registration, does not confer any rights upon the transferee. This legal binding of registration aims to prevent potential fraud and disputes arising from unregistered agreements, thereby upholding the sanctity of registered property transactions.

The Supreme Court's decision further reiterates that a GPA, which may be with wide powers, cannot be treated to be a substitute of any registered Sale Deed. The Court's rationale of mandatory registration of transfer documents is rooted to validate property transactions fully. The absence of registration renders a GPA ineffective in transactions transferring title, reinforcing the principle that legal formalities must be strictly adhered to for a valid transfer of property rights.

The Court's observation on the limitations of unregistered Agreements to Sell and General Power of Attorney appears to be grounded in the broader legal framework aimed at ensuring transparency, authenticity and the prevention of fraudulent transactions in the real estate sector. Registration serves as a crucial safeguard, providing an official record of property transactions for public at large and conferring a legal recognition of the rights of the properties to be transferred through such registered documents.

It is important to note that the Supreme Court's ruling is not a departure from established legal principles which have already be propounded including the judgment in famous Surya Lamp case but a reaffirmation of the significance of compliance with procedural requirements in property transactions. The decision underscores the centrality of registration in the process of transferring property titles, emphasizing that parties must adhere to the prescribed legal formalities as per law to secure their rights and interests.

To conclude, the recent pronouncement by the Supreme Court serves as a clarion call for adherence to legal and registration formalities in property transactions. The court's categorical assertion that no title can be transferred concerning immovable properties through an unregistered Agreement to Sell or General Power of Attorney emphasises the importance of registration in ensuring the validity and authenticity of property transactions.

Vaishali Madaan, Sr. Associate/Advocate

(Jain Law Offices)

01.12.2023

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(Disclaimer: The above are only legal views in general without any specific query or case and these views may undergo change in case of any specific query, case, matter etc. As such the readers are advised to have a specific advice before acting upon the aforesaid legal views. We do not incur any liability if any one acts upon these views without having specific case-oriented advice from us).